Keep an Eye on 'Billions' as a Market Indicator
I have a peculiar love for contrary indicators -- the weirder, the better. I find magazine-cover indicators, page-view numbers, $100 million food trucks and other oddities strangely compelling. (Here are 169 various discussions on the subject.)
But this is more than mere fetish: Back in 2003, we took a deep-dive look at 20 contrary indicators that suggested markets were reaching a bottom after the dot-com collapse. That turned out to be a timely analysis. Active traders should have more than a passing familiarity with this, since these indicators can at times be clues as to an imminent market reversal.
We must always be wary of the limitations of such indicators, especially those that are anecdotal or based upon small sample sets. Sometimes, random factors are just that -- of little significance and minimal value.
Which brings me to "Billions," the terribly titled new Showtime series made in collaboration with Andrew Ross Sorkin, the New York Times business columnist and CNBC co-anchor. Sorkin is perhaps best known as the author of the massive narrative about the financial crisis, "Too Big to Fail."
Most of "Billions" focuses on hedge funds, insider trading, the Securities and Exchange Commission and the U.S. Attorney’s office. The good news is that the cast is stellar, and includes Paul Giamatti, Damian Lewis, Maggie Siff and Malin Akerman.
The bad news is, at least based on the first episode, the program is nowhere near as good as the HBO film treatment of "Too Big to Fail." To be fair, fiction doesn't have to be plausible. However, the absurdities in "Billions" quickly become tiresome. None of the characters, except the ostensible bad guy, are especially likeable. My Bloomberg colleague Tracy Alloway watched the first six episodes, and seemed to like it more than I did, writing that it was a “dramatized pastiche of virtually every scandal to have rocked Wall Street in recent years. The financial titans depicted here are larger than life. Oozing hormones and hubris, they swagger through golf courses, charity events and even U.S. attorneys' offices."
I plan on watching the series, despite some of the wince-worthy tone and overall silliness. Just to cite one example: Would the purchase of an $83 million mansion in the Hamptons actually figure into a U.S. attorney's decision to prosecute? Forget if there is any evidence of insider trading. Either you have proof or you don't. How a billionaire spends his money is irrelevant.
What I'm really interest in is whether a show such as "Billions" could indicate a market top.
I have thought about this question before. When CNNfn replaced its stock-market shows with programming about real estate, it served as a contrary indicator for each of those.
It came up again in October 2007, when sharp-eyed Dan Gross wondered aloud if the launch of Fox Business Channel was a contrary indicator:
There's plenty of evidence that big media plays can serve as contrary indicators. There's the magazine-cover thesis—the notion that mass-circulation mainstream magazine cover stories frequently foretell the top of a financial phenomenon. Time made Amazon.com's Jeff Bezos Man of the Year in December 1999, and Fortune put Krispy Kreme on its cover in July 2003, right when the doughnut-maker hit its peak. BusinessWeek ran a cover story proclaiming the "Death of Equities" in 1979, which was a great time to buy stocks. Book publishers fall into the same trap. "Dow 36,000"was published just as the 1990s bull market ended.
As it turned out, the timing was exquisite. Fox Business launched right as equities peaked, followed by the worst recession since the Great Depression.
Gross also observed that TV shows coincidentally come out at market tops as well. "The $treet" and "Bull" debuted in 2000, just as the tech boom crested. Real-estate shows such as "Hot Properties" kicked off with inauspicious timing in the fall of 2005. A slew of home-flipping programs arrived on HGTV and other networks, just as the housing market started crumbling in 2006.
More recently, Mike Judge's brilliant send up of the world of tech and venture financing, "Silicon Valley," has become must-see TV in the worlds of tech and finance. Amusingly, Fox Business wondered in 2014 if the HBO show caught the top of the unicorn phenomenon.
The key to all of these contrary indicators is identifying when a trend has become so well-known that it has all but run its course. By the time a specific issue makes its way to magazine editors and television producers, it has become a very old and crowded trade.
At least, that was the theory. I don't know if it still applies in the modern world of social media and instant access to everything.
Although it has become fashionable to look for indicators of market tops the past few years, I can't conclusively say if "Billions" indicates a peak. It will definitely add to the oeuvre, and is worth watching for future reference.
But if there really is a Wall Street television-show indicator, we should find out soon enough.
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